Another pyramiding scheme?

Q. Criselda Dimapilis writes of a possible pyramiding operation: "I invested money with this company that solicits a minimum of P100,000 from would-be investors. The investors would then receive six monthly post-dated checks as interest payments. Our money is supposed to earn 3.5% a month for the first five months and the sixth check amounts to the 3.5% interest plus the invested principal.

I renewed my contract with this company in May 2002. I was able to encash the first five checks, from May to September of that year. In October, amid persistent rumors that this company was going bankrupt and that the investment scheme was actually a pyramiding scam, I deposited the sixth check. Sadly, the check bounced. For me, it was a confirmation that the company has run away with my hard-earned money. I have been defrauded of my savings.

What can I do? Is there still hope that I could recover my money?

A. Based on your letter, there was no product involved. Neither was there a recruitment process. These two elements constitute a pyramiding scheme. Therefore, your complaint falls under the jurisdiction of the Securities and Exchange Commission. You should write a letter of complaint to Atty. Jose Tomas Syquia, director of the compliance and enforcement department, at the SEC Bldg., EDSA, Mandaluyong. You can reach him at telephone nos. 724-7650 or 725-8260.

To stop the proliferation of pyramiding schemes and the sale of unregistered investment contracts, DTI has signed a memorandum of agreement with SEC. The MoA was designed to enhance the coordination between the two government agencies.

The MoA also defined the kinds of schemes which would fall under our jurisdiction and those that would be under the turf of the SEC. For example, multi-level network marketing schemes that offer an ostensible product defined as pyramiding scheme under Republic Act 7394 or the Consumer Act of the Philippines are under the DTI’s jurisdiction.

Multi-level network marketing schemes that do not involve the sale of products, services or credit are classified as investment contracts. These fall under the jurisdiction of the SEC. Such arrangements have the following elements:

• an investment of money

• in a common enterprise

• with expectations of high profits

• primarily through the efforts of others.

We warn the public to not fall for get-rich-quick schemes. If someone offers an opportunity to earn "big money", think first before investing. Most of the time, these investment schemes are scams.

(You may send your consumer complaints and comments to the Bureau of Trade Regulation and Consumer Protection, DTI Bldg., 361 Sen. Gil Puyat Ave., Makati City. Call us at our consumer hotlines at 896-5740 or 890-4938 or e-mail us at www.e-reklamo.net.ph)